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Strategies & Market Trends : CANSLIM - COAST TO COAST -- Ignore unavailable to you. Want to Upgrade?

To: froche who wrote (4341)	2/18/1999 5:03:00 PM
From: kendall harmon	Respond to of 6445

Firm: Hambrecht & Quist Date: 2/18/99 Total Renal Care Holdings, Inc. (TRL) BUY $9.00 FY98 A: 1.22 FY99 E: - Rob Lunbeck rlunbeck@hamquist.com TRC: Stock Crushed on Disappointing Report; Cut Rating and Estimates Total Renal Care (TRC) reported 4Q98 revenue and recurring EPS of $339.2 mil. and $0.30, below our estimates of $345.6 mil. and $0.37, respectively. Excluding certain unusual expenses in the quarter, it appears TRC would have reported EPS of $0.35. TRC also reported a $12.3 mil. charge primarily related to acquired A/R. We have lowered our rating to BUY and expect to cut our 1999 EPS estimate to the $1.55 range. At $9 the stock appears very cheap.

To: froche who wrote (4341)	2/19/1999 9:15:00 AM
From: Walk Softly	Read Replies (2) \| Respond to of 6445

Frank... good luck to us... In answer to some e:mail... Companies play with amortization of goodwill as a tax planning strategy.... for instance, if you are heading into a period of lower tax rates (as we are now), management may decide to accelerate a writeoff to take advantage of current higher rates (may take a near term eps hit to enhance long term eps), NPV analysis usually determines how a company handles this, money in the bank is determined by CASH FLOW NOT EPS.... this is the only advantage of goodwill on the balance sheet..... lots of goodwill on the balance sheet is usually taken as a negative unless you have a big tax bill hanging over your head... so one may agressively witeoff goodwill (which in my mind is the conservative thing to do) to clean up the balance sheet.... you may take a hit to eps but NOT to cash flow.... therefore, TRL's expensing (rather than amortizing) hurt 4Q eps (not cash position)........ I think they made a wise decision given the current tax environment.... even IF growth were slowing (which is debatable) I think H&Q should be increasing (not decreasing ) estimates.... obviously, there is some confusion out there..... but, being a firm believer in the self interested management types I believe TRL made a good long term decision and the SEC querry is commonplace... well, we shall see.... HLT looks good for today... BGG reaching support, a good buy point ANN still like it here ES